Summary: Some eye-opening trends are taking shape in the Community banking Industry that seem to be indicating a Tale of Two Cities scenario where the triangulation of (1) Loan Demand (positive, neutral, or negative), (2) Securities Portfolio "realized" Losses (if sales are required), (3) Institution Sources of Liquidity (FHLB/FED, sale of Securities, incremental deposit growth costs, et.al.) and (4) tightening of Cash & Cash on-Hand are starting to take center stage for many institutions.
Key Important Industry Wide Take-Away's from Bill Moreland's recent "2022 Q2 Asset Review" piece:
- The Industrywide assets $255.92B (-1.07%) quarterly drop is the second largest $ drop in history trailing the $367.72B plunge in 2009 Q1. The drop in Assets was driven by a significant reduction in Deposits.
- Bank Deposits fell $369.93B (-1.86%) in Q2 which is unprecedented. Since 2003 there have only been 7 quarters (just 9%) with a negative deposit growth print. The prior low was the $115.32 (-1.27%) drop in 2009 Q1.
- What saved the Asset shrinkage from being even greater was the $122.04B gain (59.92%) in FHLB Advances - the third highest $ increase on record.
- Net Loans and Leases leapt $410.55B (3.67%) in Q2 to hit an all time high of $11.59 Trillion. The gain was the largest $ on record and the second highest %.
- Total Securities shrunk $112.08 Billion (-1.79%) to $6.15 Trillion. The $112.08B drop is the largest $ on record with the -1.79% coming in 3rd behind the -3.43% in 2003 Q3 and -4.18% in 2003 Q4.
- Cash & Balances Due plunged $554.04B (-16.41%) in Q2 - by far the largest drop in history.
All of the above bullets are taken directly out of the Bill Moreland eMail and used above with permission from Bill Moreland and are believed to be accurate and used for directional purposes of aggregated call report data and other sources used by Bank Reg Data.
Lot's of additional insights & graphs in Bill's report. Please call or eMail us if you would like to see Bill Moreland's report in it's entirety we would be happy to eMail it to you, or go directly to the Bank Reg Data website if you are already a customer of his.
We offer Community Financial Institutions complementary Transparency Analysis. Now is a great time to take advantage of it. Please get with your Financial Advisor at SB Value to guide you through these turbulent times of balance sheet change. We look forward to it.
As always, consider a first or second opinion from SB Value Partners by eMailing us back today.
Let SB Value help you examine all these, and other methodologies, to build out your future pathways to optimizing your success.
Questions? ASK US HOW to start a complementary analysis now. It’s a great time to get some additional clarity. Learn some additional truths on the front end. It may position your bank for added improvements in 2022 and into a better positioning for 2023. Listen to what a few thought leaders have to say who have written white papers on the topic at hand. Take a read through a few Fact Sheets on the subject that we would be happy to provide.
As fiduciaries we see quite a lot – in fact we have recently reviewed just under 14,000 data points from Community Financial Institutions – likely just like yours. We look forward to sharing with you some of what we have learned. In the meantime, we thought we would help with some general information that you and your team can consider right away to round out what you are already doing. There is a lot that’s beneficial, starting with cost savings, yield improvements, and likely better balance – even protection. To find out more please click here on our website.